Quadrupling down on financial reform, U.S. Rep. John Tierney, D-Mass., joined with Rep. Walter Jones, R-N.C., to introduce the “21st Century Glass Steagall Act” in the House of Representatives. Said Tierney of the measure:
One of the largest drivers of the most recent financial crisis was the reckless behavior of financial institutions that led to consumers losing their hard-earned money through no fault of their own.
Implementing a modern-day version of the Glass-Steagall Act is one of the most important ways that Democrats and Republicans in Congress can work together to ensure those mistakes are not repeated and that consumers are protected.
The measure mirrors a Senate bill introduced by Sen. Elizabeth Warren, also a Massachusetts Democrat, and a House measure co-authored by Jones and Rep. Marcy Kaptur, D-Ohio. Sen. Tom Harkin, D-Iowa, has also authored a bill that would implement elements of the Glass-Steagall law.
Tierney said his legislation “will go a long way to ending the ‘Too Big to Fail‘ policies of the past by making large financial institutions smaller and preventing institutions that use federal depository insurance from engaging in high-risk activities.”
Any consumer who puts their hard earned money into a bank should have the peace of mind that their deposits will be safe from the irresponsible decisions being made on Wall Street.
It is unacceptable for banks that consumers trust with their everyday needs – such as savings and checking accounts – to gamble with their depositors’ money. This legislation would prevent those banks from employing such practices and would begin bringing to a close the era of rewarding ‘too big to fail’ banks with a taxpayer bailout to clean up the mess resulting from their risky financial activities.
Since core provisions of the Glass-Steagall Act were repealed in 1999, shattering the wall dividing commercial banks and investment banks, a culture of dangerous greed and excessive risk-taking has taken root in the banking world,” said Sen. John McCain, a co-sponsor of the Senate version.
Big Wall Street institutions should be free to engage in transactions with significant risk, but not with federally insured deposits. If enacted, the 21st Century Glass-Steagall Act would not end Too-Big-to-Fail. But it would rebuild the wall between commercial and investment banking that was in place for over 60 years, restore confidence in the system, and reduce risk for the American taxpayer.
Warren said, “Despite the progress we’ve made since 2008, the biggest banks continue to threaten the economy.” She added:
The four biggest banks are now 30% larger than they were just five years ago, and they have continued to engage in dangerous, high-risk practices that could once again put our economy at risk. The 21st Century Glass-Steagall Act will reestablish a wall between commercial and investment banking, make our financial system more stable and secure, and protect American families.
Tierney said the 21st Century Glass-Steagall Act will separate traditional depository banks from risky financial institutions like investment banks and swaps dealers. The legislation seeks to re-establish key provisions of the 1933 law that separated traditional banks and investment banks in response to the economic crash of 1929.